Whether you are an individual, a corporation, a member of a partnership, an estate or trust, you are subject to income tax. The amount on which tax is computed – your taxable income – is your gross income less allowable tax deductions.
The Internal Revenue Code states that “gross income means all income from whatever source derived.”
The term “income” is not defined in the law or regulations. However, a very early Supreme Court case stated, “Income may be defined as the gain derived from capital, from labor, or from both combined, provided it is understood to include profit gained through a sale or conversion of capital assets.” The Court also held that the amount of gross income on disposition of property is the proceeds less the capital value (cost basis) of the property.
Gross income is not limited to cash received. It includes income realized in any form, whether money, property, or services.
Following are some of the things you must include in your income:
- Wages, salaries and tips
- Interest received
- Income from sole proprietorships, partnerships, S corporations, trusts and estates
- Capital gains and losses
- Pensions and annuities
- Gambling income and loterry winnings
- Scholarships, fellowships and grants
- Bartering income
For more information on each type of income, click on the link to find the appropriate article.
Last reviewed: September 23, 2013